Some qoutes from Tom Bell’s paper

“patents fall far short of protecting fundamental and abstract scientific discoveries, such as ones about thestring theory of physics or the epidemiology of Avian flu.31 Researchers eager touncover those sorts of profound and vital insights generally find patent protectionunavailing….

But even with the caveat that we should chide its “failings” rather than its
“failure,” the extant market arguably undersupplies basic R&D. We can recognize that
the market supplies some of that public good (just as we recognize that copyright and
patent law supply some) without resting content. All else being equal, we would like
more basic and useful ideas, principles, systems, concepts, discoveries, and facts.”

basic R&D here means large scale investments in things like supercolliders or telescopes etc. Basically the research into the fundamental aspects of science versus the blue-ray lasers that will encrypt your next DVD-r.

“Because markets in skill-based claims reward
research, however, they tend to stimulate it. Scientific prediction exchanges, in
particular, aim at encouraging the discovery of truths about the sciences and useful arts.
Just as promoting progress in those subjects justifies the statutory creation of copyright
and patent rights, it justifies the creation, via scientific prediction exchanges, of rights
associated with claims of fact.”

Basically a public that uses a scienteific prediction market is more likely to do research into the field their betting on. It encourages people to become more informed about an issue if not solve it. This might help a lot with mathematics. After all prizes are great for the few willing to take on an Erdos challenge, but being one to win money becuase of an informed opinion attracts a new type of person that a prize might usually ignore.

“The owner of beachfront resort properties, in contrast, might hedge her
investments by purchasing real-money equivalents to the SLvl claim traded on the
Foresight Exchange, thus guaranteeing her compensation in the event that ocean levels
surge.90 Or, leastwise, she might try. That sort of significant financial hedging, which
typically falls within the jurisdiction of the Commodity Futures Trading Commission
(“CFTC”), requires quite thick markets. It looks unlikely that a market in claims about the sciences and useful arts would attract enough trading to offset large monetary risks.9″

“Prediction markets also typically offer zero-sum trading. In other words, traders
profit only at the expense of other traders.113 In that, prediction markets resemble all but
securities markets, in which all traders may simultaneously win or lose.114 Notably,
however, scientific prediction exchanges appear especially likely to invite subsidies that
would mitigate the impact of zero-sum trading. Someone particularly interested in
measuring the consensus opinion about a question of science or the useful arts, and
perhaps in stimulating R&D on the topic, might find it worthwhile to subsidize trading in
that claim on a scientific prediction exchange.115 Various funding mechanisms exist, but
all boil down to attracting traders by pumping money into a market.116 The scientific
prediction exchange’s focus on questions about the science and useful arts—matters that have long benefited from public and private subsidies—make it an especially likely target for such largess.”

“Those who buy
prediction certificates get only the right to receive payment in the event an associated
claim holds true—not the right to prevent anyone from enjoying progress in the sciences
or useful arts. Far from enclosing public goods, prediction markets help to create and share them.”

the different types of claims you could bet on would also show how much confidence scientests have in a paradigm as a whole. One thing about the paper that is annoying is that it never goes far enough. It seems like a nice pitch, but it doesn’t show how a prediction market might give better funding for science I mean speculating on problems in physics is one thing, funding the equipment needed to solve those fundamental problems doesn’t seem to be clear in this paper, only that the people who do solve a problem profit from it i.e. insider trading basically. Although I did just skim through the paper etc. Anyway, the link is a few posts below this. I was hoping to see a more detialed plan for a SPEX and more imagination as to how it might fund research, maybe a 4 cent per contract fee could add up to something or perhaps you could combine it with a communal fund for prizes and grants the public could contribute to.

As a sidenote and Outside of the SPEX, An invention prediction market that grants copyright to creators would also do away with the problem of paralell development and also patent trolls, the patent on an invention would go to the first person to actually deliver the device or theory. Hence if their were a market for a floppy display with such and such a resolution, the first person to deliver one at the specificed price point etc would get the market money. This would encourage people to propose new ideas i.e. markets and possible products so as to cover as much ideological ground as possible versus the current scheme were you want to keep your R&D quiet so the competition doesn’t know and patent trolls don’t file before you do, but then again maybe you would want to hide your research to fetch better prices on the exchange.